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When times are great — maybe especially when times are great — most people don’t think about economics. At least, if there’s any thinking going on at all, it’s not exactly clear-headed thinking. But when times take a turn for the worse, people forget about making any kind of sense at all. It would be far better if they followed the wisdom of Gayle Rivers, the fictional narrator in the novel The Five Fingers, who tells another character, “I don’t worry about death in the best of times. And these aren’t exactly the best of times.” There’s something to be said for blissful ignorance.

Murray Rothbard said that it wasn’t a sin to be economically ignorant, but it was unforgivable to be economically ignorant while gnashing one’s teeth in righteous support of certain economic policies. The overwhelming majority of Americans who yesterday confessed economic ignorance will call you a monster today for daring to suggest that public-works projects and printing money won’t get us out of the current mess. If Rothbard was right, then America is truly a nation of the damned.

If all politics is local, then all economics is micro. No political policy, regardless of how abstract in nature or distant in application, can be considered without also considering the impact it will have on individuals on the ground, right now (and in the long run, but we’ll get to that in a moment). Politicians can wax endlessly about their grand ideas for “economic stimulus” — they can make charts, and cite figures, and quote experts ad nauseum — but they cannot long ignore the fact that when they utter words such as “economy” they’re not talking about charts, figures, or “experts”; they’re talking about millions, even billions of individual persons and the inestimable number of decisions they make in the process of living their lives.

That’s why Tibor Machan was so right when he wrote in a recent op-ed (January 30) for the Yuma Sun that grand federal plans were “condescending”:

I take some exception to Barack Obama’s implicit assertion that what matters in a good society is that there be some kind of large-scale ambition afoot, some sort of big plan. Frankly, it smacks to me of those famous Five-Year Plans that the Soviet Union constantly rolled out and conscripted everyone to serve….

…The illusions created by these large projects tend to be that they aren’t just big but very important, more important than the “puny plans” of individuals. Please let’s stop being condescending toward all these folks because they aren’t part of some big plan. Their varied individual plans are quite worthwhile, thank you.

Indeed they are important. And not just from a moral point of view. They are equally worthy of consideration from a practical point of view, because when we lose sight of “small” plans in favor of “big,” more abstract goals — goals promoted by politicians and special-interest groups without any reference to reality or interest in their viability — we risk not only destroying the lives of the “little” people but ultimately digging everyone into an even deeper economic hole. That’s what happens when a bunch of Chicken Littles shout “Do something!” — without stopping to consider that the “something” is very likely going to make things worse, for everyone.

There’s certainly no shortage of “large-scale ambition afoot.” One “bailout” plan after another has the federal government’s central bank, the Federal Reserve, pumping out billions of dollars worth of paper and ink. Touting the so-called “paradox of thrift,” the planners tell Americans that by saving more and spending less they are causing more economic pain. Here again we see the point of view prevail which considers “the economy” as a giant engine in need of priming, rather than what it really is: individual people making economic decisions. So those persons who choose to save their money in times of crisis must be sacrificed to those who want to spend it. Now, if those who are spending were spending their own money there would be no problem; but having the government print money is a vicious, underhanded tax made possible by politicians helping out their “high-minded” buddies at the expense of us ignorant underlings.Private business decisions

My local paper, the Portsmouth Herald, had a front-page story (February 3) about a restaurant and grocery store in nearby Kittery Point, Maine, both owned by the same family, that are going out of business. I’m particularly sad about this because I’ve been to the restaurant, Cap’n Simeon’s, and liked it very much, and I looked forward to returning. The store next door, Frisbee’s Supermarket, has been around since 1828 and is billed as “North America’s oldest family store.” My son and I bought some bait there two summers ago before walking down to fish off the public dock. Both are local landmarks and will be sorely missed.

According to the story, the two businesses were “the victims of ‘a few financial pitfalls and a string of lousy luck.’” No doubt it doesn’t help that families are tightening their belts, eating out less, and doing more bulk shopping than piece-meal shopping at local stores that tend to be more expensive. When times were great, a few pennies on the dollar didn’t mean as much as they do now. Under the quick-fix proposals of today’s statist economists, should these businesses get a piece of the bailout money that is flying around?

Meanwhile, another story, buried on page 9, reports that the owners of a local independent coffee shop, Caffe Kilim, are benefiting from a recent decision to move from their downtown location, which had very high rent, to a place on Islington Street, just outside of downtown, where rent is cheaper. They knew the risk they were taking — downtown Portsmouth is a busy place, even in the middle of a cold New Hampshire winter — but it turned out to be a wise choice. “It seems we came home,” said owner Janice Schenker. “We actually followed our customers.”

Leaving people alone to make their own decisions, and to live with the consequences, is the essence of a free economy and a free society.Government business decisions

It’s never been my understanding that there was a big need for passenger rail service between the Seacoast and more central regions of the state, but I’m certainly not opposed to it, either. If it can be done here privately and without government intervention, I’d be delighted.

“Seacoast to Manchester Railway in Negotiations” was another front-page piece on February 3. “Pan Am Railways is negotiating with the state to run a commuter rail system from Concord to Boston and possibly from Manchester to the Seacoast,” the story began.

As usual, though, the devil’s in the details. Reading along a few paragraphs, we see, “The program is contingent on using some of the federal economic stimulus money the state expected to receive for mass transit projects.” According to the story,

The fact that a more established public transit system is not in place is “silly” to begin with, according to Doug Bates, president of the Greater Portsmouth Area Chamber of Commerce. He said such an investment would be an effective use of stimulus money and could provide an economic boost to the entire Seacoast.

Well, who can argue with that? But Mr. Bates’s wisdom continues: “Everybody would love to see a rail connection. The stuff is all right there.”

So let me get this straight: “Everybody” is so enthusiastic, demand would be so high, the land is there, the rail is there, it just needs some work and …

Why isn’t there train service there already? Could it just be that enough narrow-minded peasants persist in following their own plans, such as driving their cars rather than taking a train, that passenger rail service simply isn’t economically viable? Critics of the market tell us that capitalists are motivated only by what people want, rather than by what they supposedly “need” (always defined by those same critics), yet despite “everybody’s” wanting rail service, it doesn’t exist. Something isn’t adding up.

It’s infuriating enough when established businesses hit hard times and expect to be propped up by taxpayers. It’s insulting when businesses are to be established by taxpayers. Then, when the tax-built, tax-subsidized industry hits hard times in the future, when the malinvestments and the cronyism and corruption are uncovered, we’ll be told once more that the free market has failed us.

I’d love to see passenger rail service in the area. I’d also love to see Cap’n Simeon’s and Frisbee’s Supermarket keep their doors open. But I’m not willing to put a gun to anyone’s head to make that happen.

There is a lot more at stake than President Obama’s claim that only “modest differences” are the obstacle to the latest — and they’re coming quicker and faster — “economic stimulus package.” An economy is nothing more than the sum of all — all — of the economic choices of those who participate in it. Economic intervention is a zero-sum game, where one group benefits at the expense of another. Government should stop trying to micro-manage affairs for the benefit of those it deems most deserving and let the rest of us get on with our lives the best we can.

This article originally appeared in the July 2009 edition of Freedom Daily. Subscribe to the print or email version of Freedom Daily.

Reading List

Prepared by Richard M. Ebeling

Austrian economics is a distinctive approach to the discipline of economics that analyzes market forces without ever losing sight of the logic of individual human action. Two of the major Austrian economists in the 20th century have been Friedrich A. Hayek, who won the Nobel Prize in Economics, and Ludwig von Mises. Posted below is an Austrian Economics reading list prepared by Richard M. Ebeling, economics professor at Northwood University in Midland and former president of the Foundation for Economic Education and vice president of academic affairs at FFF.